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Johnson's Russia List


December 29, 1998    
This Date's Issues: 2535    

Johnson's Russia List
29 December 1998

[Note from David Johnson:
1. AP: Russians Found 1998 To Be Hard Year.
2. The Guardian (UK): Tom Whitehouse, 'Mad Vlad' proposes third way
for sex starved Russians.

3. Fred Weir on orphanages.
4. Peter Mahoney: Re 2530-Mark Jones.
5. CNN: Steve Harrigan, Russian orphanages struggle amid economic 

6. Washington Post: David Hoffman, Idled Arms Experts In Russia Pose 

7. New York Times: Judith Miller and William Broad, Germ Weapons: 
In Soviet Past or in the New Russia's Future?

8. Marie Stock: On small business lending.
9. AFP: Lebed calls for end of death penalty moratorium in Russia.
10. Moscow Times: Jean MacKenzie, CONFESSIONS OF A RUSSOPHILE:
Resolutions for Russia 1999. 

11. InfoArt: Russian Internet Banking Forum Called Success.]


Russians Found 1998 To Be Hard Year
December 28, 1998

MOSCOW (AP) -- To eight out of 10 Russians, 1998 was a harder year than 1997,
according to poll results issued Monday. Not surprisingly, Russians said the
country's economic crash was the most important event of the year.
Only 3 percent of the 1,600 people polled nationwide by the Public Opinion
Fund said this year was easier than last year. Eighty-two percent said it was
harder, the Interfax news agency reported.
The Public Opinion Fund compared the results to a similar poll conducted 10
years ago, when Russia was still part of the Soviet Union. Then, 79 percent
said the year had been harder than the previous one.
The pollsters did not list the margin of error. However, it was almost
certainly large enough that the results of the two polls a decade apart were
statistically indistinguishable.


The Guardian (UK)
29 December 1998
[for personal use only]
'Mad Vlad' proposes third way for sex starved Russians 
By Tom Whitehouse in Moscow

Zhirinovsky on the economy: 'Russia faces the task of building a sexually
orientated economy. This will give us a big injection of capital.' 
Zhirinovsky on the US: 'America is not simply a sexually backward
country, but
a country which practically leads a policy of sexual terrorism.' 
Zhirinovsky on himself: 'Zhirinovsky is the sexual knight to all the
girls of
Vladimir Zhirinovsky, Russia's leading maverick nationalist politician,
yesterday underlined his reputation for unconventional thinking by promising
to liberate sexually frustrated Russians from American 'masturbatory hegemony'
and proposing state-sponsored sex as the answer to the country's crisis.
His popularity under threat from new nationalist forces and his chauvinism
increasingly the norm among Russian politicians, Mr Zhirinovsky is turning to
sex in a desperate attempt to win back support among his key constituency -
the macho Russian male - before parliamentary elections next year.
In a new book, The ABC of Sex, he complements his trademark ranting against
the United States' foreign policy with an outspoken denunciation of its sexual
'Aggressive anti-sexuality is typical of the state sexual politics of
As America is the self-proclaimed leader of the modern world, this is very
dangerous and the struggle against US influence in sex and sexual ideology is
crucial,' he writes.
He proposes a 'third way' between American sexology, which he criticises for
emphasising 'getting rather than giving enjoyment', and the sterile puritanism
of the Soviet era.
With all the crusading zeal of a Slavic Dr Ruth - and describing his book as
the 'greatest contribution to sexology since Freud' - he urges Russian men and
women to increase their sexual output and abandon monogamy.
'The author shows how to provide each woman with a man, at least one man,
preferably two, ideally three: a sex knight, a husband and a young lover,' he
Ten years ago a Soviet official insisted during a live television link-up
the US that "there is no sex in the Soviet Union." Now 'mad Vlad' has come to
the rescue.
Claiming he is concerned by the rise in sexual violence in Russia, Mr
Zhirinovsky suggests every virgin should have sex with an experienced man. The
man should then give her a silver ring bought from the state as a 'sexual
certificate' on which his name is inscribed. Because young, potentially
violent men could not afford such rings, women would benefit.
To relieve stress among Russia's beleaguered astronauts he proposes sending
prostitutes to space. Prostitutes should also be licensed to the army and to
He also proposes an official role for middle-aged women in deflowering
boys. 'This is the ideal sexual combination,' he writes.
The ABC of Sex has little to say about the spread of sexually transmitted
diseases, such as Aids, or the continued use of abortion as the primary form
of birth control.
But Mr Zhirinovsky has other ideas. He proposes blowing nuclear waste
over the
restive Baltic states, and surrounding Japan with battleships to make Tokyo
give up its claim to disputed islands.


Date: Mon, 28 Dec 1998
For the Hindustan Times
From: Fred Weir in Moscow

DIMITROV, Russia (HT) -- Seven year old Maxim claps his
hands and smiles delightedly as he rummages through a package of
New Year's treats brought by visitors from Moscow. The goodies
include a toy car, a chocolate figure of Ded Moroz -- the Russian
version of Santa Claus -- a bag of apples and a bunch of bananas.
``I hope he'll share it. None of the children here have
seen fresh fruit since last summer,'' mutters Nina Sergeyeva,
head doctor of the Dimitrov Specialized Children's Home, a
facility for severely disabled orphans.
Little Max, paralyzed from the waist down by a birth
defect and abandoned by his natural mother, looks radiant as he
chatters excitedly with Alyona, a Moscow professional woman who
has been helping out financially with his care for the past
couple of years.
But otherwise it's not a pretty picture. The orphanage,
which occupies the outbuildings of an old Orthodox hillside
monastery in Dimitrov, about 100 km north of Moscow, looks like
something Charles Dickens might have described.
About 120 children live in the combination
school-hospital, sleeping on narrow cots, four per tiny room,
amid peeling paint, fraying linoleum and rattling pipes. In a
small, cold common room, about a dozen kids crowd around
a single TV set -- with no adult supervision in sight.
``I know that many of these children wouldn't be
institutionalized in a Western country,'' Ms. Sergeyeva says.
``But here there are so few options for them.''
She admits that life in the orphanage is tough. Ms.
Sergeyeva is the only permanent doctor in the entire facility,
with just four nurses to help. None of the staff has been paid in
at least two months. Morale is extremely low, she says.
State funding, never very much, has virtually dried up
since financial crisis struck Russia last August.
``It's a lucky thing we have our own garden in the
orphanage. We still have some potatoes, cabbage and beets left
from last summer's crop,'' Ms. Sergeyeva says. 
``Otherwise there would be very little. We haven't eaten
meat, cheese or eggs for months now.''
Despite the grim conditions, the children in the Dimitrov
home appear reasonably well cared for and their relations with
the staff seem warm and friendly.
That is not the case everywhere in Russia's vast network
of state orphanages, according to a report issued this month by
the non-governmental monitoring agency Human Rights Watch.
The result of a year-long investigation, the report
alleges that Russia's 200,000 institutionalized orphans are
subjected to systematic ``cruelty and neglect'' and are deprived
of their most basic human rights.
It says that Russian orphans are routinely mislabelled as
``ineducable'' and warehoused in closed institutions -- like the
Dimitrov facility -- where minimal resources are expended on
caring for them.
The report alleges a widespread pattern of abuse by staff
in Russian orphanages that includes beatings of children, sexual
assault, criminal neglect and punishment by public humiliation.
``The abuse in orphanages cannot simply be attributed to
Russia's economic crisis,'' says Kathleen Hunt, the report's
author. ``The problem of scarce resources does not justify the
appalling treatment children receive at the hands of the state.''
Photographs accompanying the study depict concentration
camp-like conditions in some Russian orphanages, including
starvation, filth, overcrowding and physical mistreatment. (The
entire report, with photos, is available on the internet at:
Russian experts say the abuses cited in the Human Rights
Watch report are the exception rather than the rule, but admit
that the system is not working.
``In today's harsh economic climate many parents are
simply dumping their children on the state,'' says Maria
Ternovskaya, director of Children's House number 19, a clean and
apparently well-run orphanage in downtown Moscow. 
``More than half the kids we get have parents somewhere.
The numbers are increasing every year, and the system is
Ms. Ternovskaya says it is true that the state medical
commission is often too quick to diagnose a child as ``retarded''
or ``disabled''.
``Resources are stretched to the limit, and we have no
staff to bring up all these children properly,'' she says. ``The
easy way is just to say nothing can be done with them, and that's
what happens all too frequently.''
About half the children from Children's House 19 have
been given to foster families over the past year, an experimental
approach for Russia that Ms. Ternovskaya believes should be
widely adopted.
``We pay professional foster parents, often unemployed
women, to do what we cannot: give the children some sort of
normal family life,'' she says. 
``It doesn't cost more, but it seems to work much


From: (Peter Mahoney)
Date: Mon, 28 Dec 1998 
Subject: Re: 2530-Mark Jones

I was glad to see Mark Jones back on the list. His inspired revolutionary
lunacy provides a refreshing relief from the market worshipping, policy wonk
rationality that permeates much of JRL commentary. My reaction to Jones'
doomsday scenarios is two-fold. The residue of the seventies'
pseudo-revolutionary still left in me wishes that he were right. The
present-day family man, trying to eke out some semblance of a middle class
existence for my wife and two kids in this LSD-trip-of-a-country, is scared
to death that he might be.
But the simple fact is he's not. There will be no revolution in Russia, at
least not one with Mr. Gennady Zyuganov at the fore. Zyuganov is no
revolutionary, and the present-day KPRF is certainly no vanguard of the
masses. Think of the great revolutionary leaders of the twentieth century:
Lenin, Mao, even Castro if you want. Zyuganov? NOT! Zyuganov is a
mediocre, visionless functionary. . He is, at best, that most despicable
form of human species * a politician * one whose primary interest is
preserving his own status. 
He has allowed the KPRF to degenerate into a feeble social democrat
non-entity, whose rave and cave opposition has been as much responsible for
the miserable status quo as anything promulgated by the Yeltsin/Chubais
bunch. They have shown themselves to be utterly incapable of winning a
national election, as their pitiful performance against an unpopular and
vulnerable Yeltsin in 96 showed, and they are utterly spent as a
revolutionary force. The CIA doesn't need to stick its grimy hands on the
Russian elections. They can simply leave it to the commies to flock it up
all on their own. What exactly has the "Communist-dominated Duma" managed
to accomplish? Well, let's see. They managed to prevent the second coming
of Chernomyrdin, and they put Iron Felix back on his pedestal. Did I miss
anything? Oh, they voted for the latest fantasy budget of the government in
order to keep the IMF bailout alive. Does that sound like a revolutionary
force to you?
Revolutions don't happen, they are made. Where is the revolutionary
ideology, the revolutionary organizing, the revolutionary vision? The
masses * that great, faceless blob of humanity on which revolutionaries
always pin their theoretical hopes * are by nature listless and apathetic,
more disposed to suffer evils while evils are sufferable. The one thing
which might stir the masses from their lethargy is a LEADER, one who can
inspire them with an alternative vision of the future, one who might move
them to sacrifice their petty dreams of the present for the potential of
something grander. Zyuganov and the KPRF have utterly failed to provide
such an alternative vision. The idea of Zyuganov seizing the moment is
about as likely as Bill Clinton refusing a blowjob. If anything resembling
the revolution of Mark Jones' dreams actually occurs, then I believe that
our final image of Gennady Zyuganov will be of him holding up his hand
trying to hold back the onrush of history even as it is trampling him
Which leaves us with Jones' second scenario, the tried and true Great
Cataclysm. It may be wishful thinking, but I just don't buy it, at least
not in 99. No question, there is a simmering in the country right now, but
I believe we are still far from the boiling point. We always tend to judge
Russians by a western standard of tolerance. This country, this people, has
suffered immensely over the course of its history. The current situation
doesn't even come close to the Russian bullshit toleration level, and there
are still enough half-assed capitalist bandaids to be applied to stretch
this agony out over several more years. Maybe if there were someone out
there sharpening the contradictions, it might be different. But there
isn't, so it won't be.

Peter P. Mahoney
Unaffiliated Rabble Rouser


Russian orphanages struggle amid economic crisis
Many Russian orphanages lack the resources to meet their basic needs 
December 28, 1998
CNN's Steve Harrigan reports on the conditions of Russian orphanages 
NOVGOROD, Russia (CNN) -- Some of the children of Russia's orphanages don't
sound like children, move like children or look like children. 
The country's orphanages have been hard hit by the government's
financial crisis -- so hard that last week, the New York-based Human Rights
Watch called the conditions "inhuman." 
Human Rights Watch found the Russian orphanage system condemns children
"to a life of deprivation and cruelty." More than 200,000 children are
classified as being "without parental care" and placed in orphanages,
though as many as 95 percent of them still have a living parent, the
organization concluded. 
For children like Vitaly, a 6-year-old in Novgorod, six hours northwest
of Moscow by road, that means bread soup for lunch. Staff members at the
orphanage in Novgorod say the children don't get enough calories. Vitaly
needs protein, but seldom gets any. 
Neither does he see his parents, both still alive and teaching school in
town. Like many parents of disabled children in Russia, they "gave up"
Vitaly to an orphanage to "try again" to have a healthy child. 
Now those orphanages lack the resources to meet their basic needs. And
conditions are worse the farther you get from Moscow. 
The children of Novgorod's Orphanage Number 3 have no coats to go
outside in the winter, and no shoes to go outside in the summer. Now food
is running low. 
"This orphanage is supposed to get 12 cents a day to feed each child.
This month they've gotten nothing," said Irina Vodkailo, the orphanage's
director. "What we have now is powdered milk and some grain -- enough for
three days, not more." 
The children stay in bed all day, or sit in a playpen, wet. According to
staff members, few survive to age 14. The leading cause of death in
Orphanage Number 3 is pneumonia. 
The Russian government has publicly announced steps to improve
conditions in its orphanages. But Human Rights watch concluded the
proclamations have yielded few results. 
"The reaction of the Russian authorities to the critique of their
orphanages has been to block access to the institutions; punish or threaten
to fire workers if they speak about abuses; and, in some instances, pardon
those who are responsible for the wrongdoing," the group's report found. 
Call if you want to help: 
Russian Orphanage Association 011-7-81664-345-05 
Action for Russia's Children 011-7-095-283-3526 
Downside Up 011-7-095-256-4525 
Center for Curative Pedagogics 011-7-095-131-0683 
Maria's Children 011-7-095-929-1311 
NAN 011-7-095-126-3475 
Our Family 011-7-095-924-7664 


Washington Post
December 28, 1998
[for personal use only]
Idled Arms Experts In Russia Pose Threat
Many Take Talents to Developing States
By David Hoffman

MOSCOW—Boris Vinogradov, a tall, balding engineer with an easygoing manner,
once was a captain of Soviet weapons technology. Even now, his office has the
aura of a citadel of military science. In the center sits a giant globe, a
monument to the planetary reach of his ambitions.
Vinogradov was among the elite who built the Soviet Union's antiballistic
missile system over Moscow, a giant network of nuclear-armed rockets and
radars. Their six-story headquarters at No. 80 Leningradsky Prospekt was
ultra-secret and bore a simple name: The Scientific Research Institute of
Radio Device Design.
A sign still hangs outside the institute, but in the new Russia, the
scientists inside have barely survived. Today, their building is a beehive of
another kind.
Dozens of Chinese men jostle huge yellow bales of goods on their backs,
carrying them up and down the stairs. They are "shuttle traders," the hardy,
cross-border merchants who lug cheap goods into Russia for meager wages. They
have rented four floors of the institute and turned it into a warehouse for
leather jackets and furs.
From his windows above them, Vinogradov, who spent 30 years in the highest
ranks of the Soviet and Russian defense industry, looks down with feelings of
bitterness. "I feel humiliation," he said.
His despair goes to the heart of one of the least understood but most
significant consequences of the end of the Cold War and collapse of the Soviet
military-industrial complex. Tens of thousands of highly trained specialists
who built Soviet weapons of mass destruction -- nuclear, chemical and
biological weapons and the means to deliver them -- have been thrown onto the
street in Russia's chaos of recent years.
Their research institutes have been turned into warehouses, or just
Their government paychecks stopped. Many have found other jobs in business.
Still others have just disappeared. Despite Western efforts to offer some of
them civilian work, no one knows where all the weapons scientists have gone.
It is certain, however, that some have been caught up in a dangerous global
contest for their skills. According to well-informed Russian and Western
officials, over the last seven years a steady stream of know-how and
technology and, in some cases, the scientists themselves, have been plucked
from Russia by nations hungry to build their own weapons of mass destruction.
Iraq and Iran, as well as China, India and North Korea, have benefited from
Soviet and Russian weapons expertise. Russia hosted undercover groups and
shady businessmen shopping for missile parts and technology. Export controls
were practically unenforced. "I do not know of any major cases of prosecution
of export control violations which put people in jail," said Vladimir Orlov,
director of the Center for Policy Studies in Russia, a nonproliferation group
that exposed how Iraq bought Russian missile-guidance systems.
When the Soviet Union fell apart in 1991, alarm bells sounded in the West
about the fate of the core 2,500 to 3,000 nuclear scientists who had direct
knowledge of bomb-building technology and were located in "secret" nuclear
cities and laboratories.
But now it is clear that was only part of the problem. Just as
vulnerable, if
not more so, were tens of thousands of specialists who worked outside the
weapons laboratories and beyond the barbed wire fences of the closed cities.
In the Soviet era, weapons scientists accepted a basic trade-off: They got
better living standards and a chance to carry out their research but forfeited
the right to travel abroad. The deal was ironclad: The Soviet police state
enforced it. The scientists were tracked. But today, this compact between the
government and the weapons builders is in tatters. "It doesn't exist," said
Vinogradov. "The government no longer provides wages, much less a decent
standard of living, so the scientists just drift away."
Moreover, some of the early assumptions about the Russian weapons scientists
proved wrong. There was not a mass exodus from Russia, although some left.
Instead, the proliferation of missile technology and nuclear know-how came
from inside. Scientists could be approached for information, technology and
designs without attracting attention.
They did not have to leave Russia. The buyers came to them....

'A Desperate Time'

In the early 1990s, many Soviet weapons scientists saw their world
disintegrate. But some seized a lifeline thrown by the West.
Sergei Shumsky grew up in the closed city of Chelyabinsk-70 in the Ural
Mountains, one of the Soviet Union's two nuclear weapons laboratories, known
today as Snezhinsk. His father was a weapons engineer. Shumsky studied nuclear
physics in Moscow, but when the Soviet Union collapsed, his research dried up.
Shumsky, a physicist at the Lebedev Physics Institute, recalled that many
colleagues were set adrift. Some went abroad, others went into business. Vague
offers came from strange Middle Eastern companies.
"Indeed, we had contacts with some Eastern companies which tried to have
informal collaboration for not very much money," he said. "When you haven't
been paid a salary for several months, there is a high possibility of such
kinds of cooperation."
Victor Vyshinsky is a department head at the Central Aerohydrodynamic
Institute, which was a prestigious flight-research center in the Soviet era.
But as the Soviet Union broke up, Vishinsky was at a loss to market his skills
as an expert on calculating fluid dynamics. In the Soviet years, he researched
the aerodynamics of cruise missiles. "You know scientists work like miners in
a mine," he recalled. "We felt that the air stopped coming into our hole, into
our mine."
Vyshinsky said he tried to adapt, looking for commercial applications for
expertise, but nothing worked out. "It was a desperate time," he said, as many
scientists felt abandoned by the state that had so long coddled them.
He recalled there was little to stop a weapons scientist from leaving
despite official restrictions. "The only thing that stops you is scruples," he
said. "But if someone takes it into their head to sell something, then I don't
think there will be a problem."
Neither Shumsky, 40, nor Vyshinsky, 47, sold their skills, but instead they
turned to an international effort trying to stanch the flow of weapons
technology out of Russia.
The International Science and Technology Center, a joint program of the
States, European Union, Japan, South Korea, Norway and private firms, as well
as Russia, has spent nearly $190 million for grants to persuade Russian
weapons scientists to take up civilian work. Shumsky won a three-year grant to
work on neural networks for computers, and Vyshinsky found aid for his
research on vortex trails of commercial airliners.
But the Western effort has not plugged all the holes. The core of the
nuclear-weapons scientists is about 2,500 specialists, many at the two nuclear
weapons laboratories. Beyond that, there are 5,000 more specialists in
fabricating weapons and handling materials, and a third level of 12,000 to
15,000, possibly more, involved in uranium and plutonium production, delivery
systems, and other aspects of weapons of mass destruction.
According to several estimates, the Western effort may have reached 60
of the core scientists. But where the rest have gone is simply not known. Nor
is it known how much technology and know-how slipped out of Russia.
"The closed cities are closed, but Moscow is open to international
communications," said a European diplomat who has been deeply involved in the
"When you talk about proliferation of knowledge, the main risk was not the
emigration of scientists to the desert -- none of them really wanted to do
this -- but using modern means of communication. It would be extremely easy to
do this with the Internet and faxes."


New York Times
28 December 1998
[for personal use only]
Germ Weapons: In Soviet Past or in the New Russia's Future?

Just as the Soviet Union was ending its confrontation with the West in the
late 1980s, the military officers who ran Moscow's secretive germ warfare
program ordered up new, much deadlier arms. 
At a remote laboratory complex in Kazakhstan, Russian scientists began
animal testing of the Marburg virus, a highly contagious germ that kills by
attacking every organ and tissue in the body. 
This secret testing, described recently by several veterans of the Soviet
program, went undetected at the time by Western intelligence agencies, which
knew few specifics about the plant's operations. 
Kazakhstan gave up nuclear, biological and chemical weapons soon after it
became independent, and permitted American experts and a handful of reporters
to visit the plant. From their observations, and from Soviet defectors, the
West has finally learned what was unfolding there in the final years of the
Cold War. 
The belated discovery of this exotic arms research is one of the elements of
a fierce dispute in Washington over whether the Russian military is heeding
President Boris Yeltsin's 1992 order to abandon germ warfare. 
Similar uncertainties loom about Iraq. With the apparent end of United
Nations inspections, the West is now trying to track Baghdad's germ work with
satellites and, perhaps, spies -- the same methods that failed to unmask the
Soviet program. 
Clinton administration officials contend that Russia no longer poses a major
threat. Western experts have visited most of its key civilian laboratories,
and officials disclosed that Russia had recently moved closer to allowing
Western experts to visit its closed military installations, a crucial step
that could dispel many of the lingering doubts about Moscow's activities. 
Administration officials assert that much of what they now understand about
the Soviet Union's germ weapons has been gleaned through Western aid programs
designed to foster peaceful research projects. Those projects also pay
salaries to former germ scientists, fending off what officials say is the
gravest danger from the Soviet program -- recruitment of scientists by rogue
states or terrorists. 
But some administration officials and Republicans in Congress assert that
Russia is still secretly researching germ weapons, just as it did in the Cold
War. Congress recently cut spending on the cooperative exchanges with Russian
germ scientists from $14 million to $7 million, both because of persistent
doubts about Russian intentions and to punish Moscow for selling nuclear and
missile technology to Iran.... 

Moscow's lies on the issue during the Cold War, skeptics in Washington
argue, make trust and cooperation impossible. Supporters of the Western
programs say they do not blindly trust Russia, but feel partnership is the
best chance for verifying Moscow's claim to have renounced germ weapons. 
Skeptics note that Yeltsin has banned Russian experts from discussing any
aspect of their country's germ history and has retained several generals
instrumental in the Soviet program. 
They worry, particularly, that research may be quietly proceeding on some of
the least known of the Soviet advances: "bio-regulators." This work was aimed
at creating germ agents that could take control of human functions like moods,
heart rhythms and sleep patterns. 
Igor V. Domaradskij, a pioneer of the Soviet program, said in a recent
interview that his scientists were searching for compounds that could "sharply
change a person's behavior or emotions, such as causing fear or an ultra-rapid
As far as is known, they did not succeed. But Domaradskij said biological
science had now progressed to the the point where "it can be done." 
Alibek, the former germ scientist who once ran the plant in Kazakhstan, is
critical of part of the West's approach. The Soviet germ program was hidden in
a myriad of civilian and military institutes. Even Soviet intelligence, the
KGB, he disclosed, had its own germ centers, which developed agents for
assassination under the code name Flayta, or Flute. 
Some of Moscow's former germ scientists, he said, have recently published
papers that could conceivably aid weapons research, including several about
cultivating the deadly Marburg virus. 
Russia, Alibek insisted, will never entirely abandon a program in which it
had military superiority, no matter how many treaties it signs or cooperative
programs it joins. "I say, 'Guys, don't be so gullible. They're lying to you,"
' he said. 
Rep. Floyd D. Spence, R-S.C., who heads the House Committee on National
Security, contended that even civilian biology partnerships might be dangerous
if they helped sustain Russia's germ establishment. 
Administration officials say those exchange programs are already showing
results. Those who follow the program most closely say that there is no
evidence of large-scale activity even at the military institutes. And one
American expert, who spoke on the condition of anonymity, said Russia's
economic turmoil made large-scale germ work unlikely. 
"Maybe there is a well-lit, well-heated, well-funded military lab out there
that is just humming along, totally insulated from the cutbacks that have
slashed funding for military salaries and other critical Russian defense
needs," he said. "But I don't believe it." 
Top Russian scientists deny that Russia still has a germ weapons program.
"Everything has been destroyed, on our side and yours," said Nickolai N.
Urakov, a former Soviet general who heads a converted germ center at Obolensk
that now does research for peaceful purposes. 
Former Sen. Sam Nunn, D-Ga., who helped sponsor legislation authorizing the
scientific exchanges and recently toured Obolensk, said the ambiguity about
Russia's germ program would persist because much basic biological research has
both civilian and military applications. 
"This is not something you see with a satellite," he said. "It all turns on
intent. That's why this is such a hard intelligence problem." 
But the gamble, he said, is worth the risk. 
"We still don't know, and won't know for many years to come, whether or not
we succeeded," Nunn said recently in Moscow. "But we do know that while we can
argue about whether the glass is half full or half empty, we know that the
trend is right. A decade ago, the glass was all empty." 


Date: Mon, 28 Dec 1998
From: Marie Stock <>
Subject: On small business lending

On small business lending:
Indeed, a variety of foreign-initiated small business lending programs have 
been operating in Russia for several years. However, the landscape for
business lending by local banks, with or without foreign participation,
on August 17, 1998. 
Most Russian commercial banks have stopped lending to businesses, let alone 
small businesses. Lending is available to the a close-knit circle of
at some banks. Foreign commerical banks with licenses to operate, serve, 
primarily, a short list of multinational and major domestic companies. They 
are not in the business of lending to budding Russian businesses.
Lending under the EBRD and foreign aide-sponsored programs is, for the
most part, in USD or DM. With the devaluation, only particularly brave
business owners are actively seeking currency-denominated credit at this
Currency lending rates are about 18%. Factoring in the ruble fall, clients
now repaying at the equivalent of 200% - 300%. Lending in rubles by Russian
banks has evaporated, except for the above noted examples and short-term 
high interest loans.
Even prior to the events of August, Russian banks limited lending to small 
businesses, because they lack the capital and the know-how to 
evaluate risk effectively. Thus, local banks must rely on strict 
collateral-based methods for making their decisions. In addition, the 
complexities of the legislative and regulatory environment make it difficult
for banks to take the risk. Collecting a bad debt through the court system 
is costly and time-consuming. Even seemingly simple items such as
insurance of 
equipment or goods are tricky due to the dearth of trustworthy insurance 
From the standpoint of the entrepreneur, taking a loan also requires a 
readiness to open up their business and books to the scrutiny of bank 
credit officers. For some businesses, who fear repercussions from the tax 
inspector or local authorities, this is not worth the time, effort or risk. 
In addition, the absence of a respect for contracts makes it difficult for 
bank and borrower to reach an agreement. For example, in a standard 
Russian loan contract, the bank may unilaterally change the interest rate 
at any time during the term of the loan. Borrowers in August were 
confronted with a choice from several Russian commercial banks, 
Pay-in-Full by 1-Sept-98 or take a rate hike to 140% or higher. These
along with others, make entreprenuers understandably wary about working 
with Russian banks.
In our program in Saratov, the selection of potential borrowers, credit 
committee decisions and monitoring of loans are collaborative efforts. 
Eurasia works hand-in-hand with the bank and borrower, mentoring each step 
of the way. In partnership with the bank, we have located some fine examples 
of local entrepreneurship.
Anecdotal evidence of the impact our approach has made was felt after
>From some of our grant recipients we received calls where they complained 
about the 'devastation' brought to their projects and explained why they 
would no longer be able to fulfill their obligations. Meanwhile, our 
borrowers were reasonable, responsible and open. They have continued to 
run their business and repay their loans through this period.
There is a modest market for small business loans. Potential clients in
such as, agribusiness and food-processing sector, for example, hold promise. 
Businesses involved in small and light manufacturing is another target
Any business with export potential would be considered, if the company needed
credit, but currency regulation laws may make it difficult for these companies
to repay a hard currency loan.
However, finding businesses, in these or other sectors with bright, 
forward-thinking managers, able to adapt and survive in the environment 
and in NEED of credit, is not easy. 
Working with the banks to help them to learn how to identify these
is an important first step. It opens them up to a new approach to lending.
A key indicator of success for one of the foreign-sponsored programs might be 
whether the bank continues to lend to businesses, after the termination 
of a program, using their own funds, while applying the credit analyses 
and monitoring tools developed with Eurasia Foundation, EBRD and others.
Loan officers have been trained in EBRD and other programs. Although, some 
of the banks employing these specialists may close in the next months. 
Ideally, these individuals will find positions in regional banks --- that, 
for the moment at least, are weathering the storm -- and there they will 
gradually introduce new lending methodologies to Russian banking. 
However, all is moot, without a more receptive attitude to small 
business from authorities and the general public.

Marie F. Stock
Regional Director
Eurasia Foundation
Southern Russia Regional Office
PO Box 3221
Saratov 410601, Russia


Lebed calls for end of death penalty moratorium in Russia

MOSCOW, Dec 29 (AFP) - Krasnoyarsk Governor Alexander Lebed called for an end
to the Russian moratorium on the death penalty and an extension of the number
of crimes that would fall under capital punishment, in an interview with the
Izvestiya newspaper published Tuesday.
The gruff former paratrooper general and potential presidential candidate
compared the continuation of the moratorium in "a period of growth in violent
crime" to "abstaining from vaccination during an epidemic."
The governor of the Siberian region said that Russia has become a "criminal
state" during its reform years due to the senseless destruction of the old
system of power and its takeover by "people without any experience,
discipline, and national awareness."
Lebed called for harsher penalties for criminals, but added that existing
legislation made it possible to "powerfully beat down the wave of crime" with
increased political will and "genuine desire."
The ex-security chief also argued against a proposed introduction of a jury
system in Russia, saying, "Wretched, defenseless jurors would be easier to
bribe and intimidate" than judges.
Lebed added that immunity for members of parliament from prosecution for
crimes committed while in office should be abolished, since "it attracts the
criminal element into government as honey attracts flies."
He also said that police should be given broader latitude in using weapons.
The governor said that his suggestions would not threaten Russia's relations
with the West since Russia has already acquired a reputation for widespread
"The western world would welcome the establishment of basic order in our
country," he added.
President Boris Yeltsin refused to lift the death penalty moratorium on
December 6 despite increasing calls for capital punishment to be reinstated to
deal with serious criminals.
Russia suspended use of the death penalty in 1996 when it joined the Council
of Europe, which promotes democracy and human rights.
Calls for harsher punishments to help stamp out crime and corruption have
multiplied following the contract killing last month of opposition liberal
deputy Galina Starovoytova, 52, who was gunned down in Saint Petersburg. 


Moscow Times
December 29, 1998 
CONFESSIONS OF A RUSSOPHILE: Resolutions for Russia 1999 
By Jean MacKenzie 

It's just a few days until the New Year, and time to start rolling out
all those tired old resolutions we make every Dec. 31 and abandon by
I don't know about the rest of you, but having to write "1999" on all my
checks and other official documents is asobering, if not to say
frightening, thought. Just one more year until the end of the millennium,
with all those insidious zeros, the distinct possibility of a mega-computer
glitch and the attendant threat of global chaos. 
Russia, of course, has beaten everyone to the punch and gone for chaos
early. Who needs the Y2K bug when you have an entire government working to
foul things up? What with bankrupting the richest country in the world,
calling for, or at least condoning, a vicious, ugly nationalism, and trying
desperately to get rid of the president they worked so hard to force on the
country two years ago, it has been quite a year for Russia's leaders. 
I would love to have a hand in drawing up their resolution lists.
Perhaps General Albert Makashov will develop some decency, Gazprom will pay
its taxes, and the oligarchs will stop robbing the country blind. Even if
they all stuck to their resolve for just a week or two, Russia would be
much improved. 
For the past few days I have been steadfastly ignoring the news, trying
to wring the last bits of peace and good will out of my Christmas vacation.
But even in the blessed, well-fed isolation of Scandinavia, things slip
through. Norway is concerned about its big, untidy northern neighbor, and
is putting itself out to help. 
In every food store and in some of the town's most exclusive shops,
there is information on how to get aid to Russia's starving populace. For
100 Norwegian kroner (about $15) I can send a food package to Russia,
destined, its seems, for the child on the cover of the brochure - a small
boy with a dirty face and a cardboard sign that reads, in badly misspelled
Russian: "Good people, my mama has died. Please help me." 
You see this kid, or dozens just like him, in every metro station in
Moscow. He is unlikely to benefit from foreign largess, and probably
doesn't need it anyway, since he undoubtedly gets paid by the beggars'
mafia that controls his particular stretch of the circle line. 
I have tried to tell my friends here that this is not the face of
Russia's misery, that it is teachers, doctors, miners and office workers
who need their help. The people in trouble have jobs and apartments, modest
habits and sensible aspirations, normal people not unlike the Scandinavians
They are not victims of some natural disaster, there has been no
earthquake or volcano, no famine, fire or flood. Just a government that has
abandoned its citizens, that has decided not to pay them for their labor,
or, in some cases, not to heat their homes as the temperature drops into
the sub-zero range. 
Try explaining that to sane, sensible, well-fed Norwegians. I feel like
a lunatic. 
"I just can't think about it," sighed Katya, a young Russian who left
her homeland over five years ago. "Russia has always suffered so much.
First there was the Tatar-Mongol invasion ..." 
Oh no. Here we go with the Tatar yoke again. Maybe I'm just jealous.
Coming from a country with very little history to speak of, where most
antiques are newer than Russia's modern stuff, I may be envious of a people
who can blame present day difficulties on Genghis Khan. 
It's a lot more comfortable than trying to assign responsibility a bit
closer to home, I suppose. But when I pointed this out to Katya, she
objected strenuously. 
"If they start looking for someone to blame they will never stop," she
said. "Russia will set the whole world on fire." 
This is a common refrain, a sort of Incredible Hulk "Don't make me mad,
you won't like me when I'm mad" kind of explanation for Russian passivity.
Everyone seems scared to death of the possibility of revolt except the one
group that should be - the government that is, once again, cheating its own
But one of my major resolutions this year will be to stop bashing the
country in which I have spent most of my adult life. I am going to start
looking on the bright side, if I can find one. So look for kinder, gentler
columns - at least until mid-January... 


Russian Internet Banking Forum Called Success
By Eugenia Volynkina, InfoArt.

For four years in a row until last year, the Forum of Banking Systems'
Developers used to be held in Russia. The fifth annual event, which was
typically attended by specialists from hundreds of banks in Russia and the
Commonwealth, was originally scheduled for this September 1998, but the
continuing financial crisis in Russia caused the organizers to host a lower-
cost conference, this time on the Internet.The first Internet event was hosted
earlier this month and early reports indicate that the 700-plus banks which
took part thought it was a success. 

The event kicked off on December 17 at . The Web event
has products and services on show from more than 30 firms. Plans call for the
Web site to be enhanced next month by having delegates display more than 50
presentations on the site. 

Topics scheduled for the January program include: 
() Retail banking services and payment systems, 
() Bank-client systems and electronic payments, 
() Resources management and financial analysis, 
() Turn-key solutions for banks with a large network of branch offices, 
() Turn-key solutions for small to medium banks, 
() Data protection in financial computer systems, and, 
() Value-added services, network solutions and telecommunications. 

According to the organizers, discussions on each of these topics will take
between two to three days. During these days, teleconferences will be held to
consider the topic and the relevant reports. 

About 400 representatives of banking, exchange and financial institutions are
expected to take part in the January program. 



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